DIC Asset AG: Forecast update for the 2020 financial year

03-Apr-2020 / 20:59 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
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Publication of inside information pursuant to Article 17, MAR

DIC Asset AG: Forecast update for the 2020 financial year

Updated FFO forecast due to the COVID-19 pandemic:
high prior-year level of 2019 expected to be matched at EUR 94 million to EUR 96 million

Upholding the dividend proposal in the amount of EUR 0.66 per share

Frankfurt am Main, 3 April 2020. In consideration of the current situation caused by the COVID-19 pandemic and of the effects it is expected to have on the present and future business performance, the Management Board of DIC Asset AG adjusted its forecast for the 2020 financial year today.

Federal Government Passes New Law to Mitigate Effects of COVID-19 Pandemic

The German law to mitigate the consequences of the COVID-19 pandemic, which was proclaimed on 27 March 2020, contains provisions that, inter alia, limit a landlord's right of termination on the grounds of payment arrears if these are attributable to the consequences of the COVID-19 pandemic, the restriction being limited to the period beginning 1 April and ending 30 June 2020. Claims to the rent payments are still due, and will have to be settled by 30 June 2022 at the latest.

Anticipated Impact on DIC Asset

Based on the current status quo, the Management Board assumes that the COVID-19 pandemic will impact the expected rental income and the real estate management fees of DIC Asset AG during the 2020 financial year. Until 03 April 2020, tenants representing a monthly rental volume of c. EUR 1.5 million (including, inter alia, retailers in the non-food segment, gastronomy and hotels) have indicated a need to suspend their rent payments for periods ranging from a single month to three months. The Company is in dialogue with its tenants, and is striving to find a mutually acceptable and optimal contract-based solution. In some important cases, the Company has already agreed to certain arrangements.

The government measures imposed nationwide are expected to dampen the transaction activity on the German real estate market in general. With a view to a possibly lower transaction volume or later-than-planned transfers of possession, benefits and burdens for properties either in the Commercial Portfolio or in the Institutional Business, the Company expects that the acquisition-related gross rental income will either be reduced or contribute to earnings after the end of 2020, while also anticipating lower transaction-based real estate management fees and, as a result of this as well as due to possible rent reductions, lower recurring real estate management fees, too.

Revised FFO Forecast on High Prior-Year Level

On the basis of the aforesaid effects, DIC Asset AG has adjusted its forecast for the 2020 financial year. The Company now anticipates Funds from operations (FFO)* on the high level of the previous year, 2019 (EUR 95.0 million):

sales volume out of the Commercial Portfolio unchanged at c. EUR 100 million

sales volume out of the Institutional Business portfolio unchanged at c. EUR 300 million

Dividend Proposal Remains in Place

Given its earnings strength, DIC Asset AG upholds its dividend proposal as well as the dividend policy it followed over the past years, still intending to propose a dividend distribution in an amount of EUR 0.66 for the 2019 financial year to the annual general meeting, with shareholders to be given the choice to receive the dividend alternatively in the form of new shares. The regular annual general meeting is expected to take place at some point during the second half of 2020.

*Explanatory note: funds from operations in property management before amortisations, taxes, gains on sales and development projects, as well as from other one-off or non-cash earnings components.